Monday, August 31, 2015

There
are many personality measures, and each one offers its own unique insight into
what makes you tick. But aside from being a pleasant 20-minute distraction
in the middle of the workday, there are real benefits to taking assessments
like the Meyers-Briggs Type Indicator or even BuzzFeed's "Which Disney
Princess Are You" quiz.

Below
are some truly legitimate reasons for taking a personality test.

1.
It can help inform your career.

Should
you be an engineer or a doctor? A social worker or a journalist? Passion is
part of the equation, but your personality may also determine what occupation
is a good fit.

Take
highly sensitive people, for instance. According to Elaine Aron, a longtime
researcher of the personality type, HSPs may want to consider careers like teaching because of their service-based nature. HSPs also enjoy quiet workplaces because they don't
like overstimulation, Aron previously told HuffPost.

Additionally,
personality tests may also be part of the job hunt. Some companies use the assessments in
the application process to help vet candidates, the Wall Street Journal
reported. Companies may also offer personality tests during their training
process after an employee has been hired as well.

2.
It can help you decide what to study in school.

Character
assessments can also help college students as they
navigate their area of study. The more you know what your personality
aligns with, the better idea you'll have of what to major in when you go to
school. A 2006 study published in the Journal of Vocational Behavior found that
students who were more personally interested in what they
were studying had an increased likelihood of performing better.

3.
It will help you understand your strengths and weaknesses.

The
more insight you have into how you operate, the easier it is to determine what
your best and worst traits are -- something that can come in handy both
personally and professionally.

For
example, according assessments based on the Meyer's-Briggs test, ESFJs, or
Extroverted-Sensing-Feeling-Judging individuals, are "caregivers" and work hard to make other people
happy.
This is a great quality to have, but it may lend itself to being too much of a
people pleaser. Strength? They care about others. Weakness? They tend to ignore
their own needs.

4.
It plays a role in social interactions.

These
quizzes and tests help you connect with others who are just like you, Mitch
Prinstein, a professor of psychology at the University of North Carolina at
Chapel Hill, explained to NBC News in 2014. "Ultimately, they give you some
feedback on whether your behavior is similar to others, what your niche is, and
how similar you are to a sub-group of people," Prinstein said. "That is
inherently very rewarding to people."

5.
It feels good to know yourself.

Chances
are you've received personality test results that make you exclaim "this
is so me" (or, if not, you just take the test again). But why
does it really matter what the answers say? Humans like the validation that comes
with establishing who they really are as individuals. The more you know yourself,
the more you're able to assert what you really need in life, relationships or
otherwise. How else are you going to know what kind of vacation to take or what city you actually belong in?

So
storm fearlessly into the world, armed with the knowledge that you're Type B, an introvert, an old soul or whatever it is
that you identify with. Let that personality shine.

Leadership
development often focuses on doing — the mastering and use of certain desirable skills and behaviors that concretely show
someone to be leading. Competency-based models can provide lists of such
skills, as well as attributes of their practice. But where leadership
effectiveness really starts is with thinking — adopting a mental model
that makes it possible to acquire those skills and demonstrate those behaviors
in the first place. Mastering leadership thinking can be challenging, but it is
absolutely essential. I may adopt the exact stance and handgrip of Jordan Spieth, but I’m unlikely to win
the Masters — while there may be a (wide) gap in our athletic abilities, there
is an even larger one in our mental capacity for the game of golf.

Leadership
thinking can be learned but is difficult to teach. It is a matter of asking
questions and presenting challenges that help someone discover the mental model
that enables their “best leader” to emerge. It requires not just competency,
but demonstrated proficiency. And proficiency only comes with practice,
feedback, and analysis. Journaling and other reflective exercises are good for processing and absorbing both
successes and failures. As Peter Drucker said, “Follow effective
action with quiet reflection. From the quiet reflection will come even more
effective action.”

Leadership
thinking requires not just competency, but demonstrated proficiency.

In
my experience, there are three big mental shifts that aspiring leaders must
make in order to develop thinking capacity and capability:

Shift
1: From linearity to complexity.

Management systems and processes tend to be
linear. They assume that similar inputs will result in similar outputs. In many
situations, this holds true. Leadership, however, requires a more nuanced view
of the world because it involves people: what motivates them, what their
interests are, and how engaged they become. Mechanical systems may be linear
but as soon as the human element becomes involved, the system becomes both
complex and adaptive. It is dynamic — similar inputs may bring about wildly
divergent outputs.

As
a leader, you come to understand that relationships between the system
components are paramount, rather than the components themselves. Discerning
these dynamics is essential to achieving your desired outcome, which means you
think about connectivity, and the extent and robustness of those connections.
You accept that these relationships contain some performance factors you
control and some you don’t — you are part of the system, but likely not its
gravitational center — and that effective influence can amplify your impact on
those beyond your direct purview.

When
things go well or when you hit a bump along your leadership road, ask yourself
which direct and indirect relationships were at play. Where did your attention
to positive connectivity pay dividends and where might you have done better?

Shift
2: From “focus” as a noun to “focus” as a verb.

There is always temptation
to set static goals — annual growth rate, net profit, or customer acquisition
costs, for example — but once you accept that you are operating in a dynamic
and adaptive environment, you begin to realize such goals have limitations. As
a leader, you must continually recalibrate to ensure that you have established
the right goals and that they not only include financial measures but also
purpose (understanding the problem your customer has hired you to help solve)
and values (the bedrock principles that guide your activities).

Clarity
is a constant challenge, particularly in large organizations with multiple
business units and geographic theaters of operations: Associates and executives
come and go; competitors thrust and parry; customers evolve; technology
disrupts. You must balance short- and long-term interests as well as the needs
of diverse stakeholders. Each of these can create distortions and distractions.
When you gain clarity on purpose, values, and performance, you foster agility
throughout the organization. You enable order without having to control every
action and decision. That’s leadership.

As
you contemplate the outcomes you achieve — for better or worse — ask yourself
about clarity. Ask others and accept their honest feedback. Often, poor
signal-to-noise ratio in internal feedback loops results in less clarity than
you imagine.

Shift
3: From they to you.

For too long, individuals have looked to
their organizations to tell them how to develop as leaders, and this competency
model has dictated the training agenda. According to Jay Conger of the Marshall School of Business and Douglas
Ready of MIT’s Sloan School, competency models offer the advantages of
“clarity, consistency, and connectivity [with other HR processes].” But Conger
and Ready also point out that competency models have significant limitations
because they tend to be complicated, often with 30 to 50 components; conceptual
in that they usually are based on a leadership ideal; and are built on current
realities rather than future needs.

Let
me add to their analysis that the traditional model was designed to assess and
mold people based on the needs of the enterprise — what the company wants. The
models do not fully consider the individuality of each person being pushed
through the Play-Doh mold and how that person might make a distinct leadership
mark. They also tend not to include some of what we at the NPLI have found to be important
leader characteristics, such as embracing complexity, exhibiting curiosity, and
actively recruiting strong people to your team. These are tough to assess with
standard pre- and post-training tools.

Ask
yourself: What are you doing to improve your leadership capacity and
capability? What are you doing to push your boundaries and test your
limitations? How are you getting ready for where you ultimately want to
be beyond the next rung of the ladder?

You
are likely to work in many contexts and will not spend your entire career in a
single firm (or find all of your leadership opportunities in your work life).
In other words, you need to take responsibility for understanding your
strengths and weaknesses and discerning where and how you can make your most
meaningful leadership contributions. Most important, you must take ownership of
your own leadership development. With the mindset of a true leader, you can
take the best of what your company offers — and then seek out more.

-Eric
J. McNulty is the director of research at the National Preparedness Leadership
Initiative and writes frequently about leadership and resilience.

INFRASTRUCTURE
SPECIAL Making infrastructure exciting: An interview with Peter Dawson

The public appreciates
the creation of great infrastructure—but the process is difficult.

Peter Dawson has
worked for the privately owned American engineering/construction giant Bechtel
Corporation since 1978. He oversees a global portfolio of major projects,
ranging from motorways in Kosovo to subway lines in Riyadh to gas plants in
Africa to nuclear cleanup and construction in the United States. In this
interview with McKinsey’s Adrian Booth, he talks about the challenges of
building infrastructure in both developed and developing countries.

McKinsey: You once said, “Vibrant economies depend
on world-class infrastructure.” What did you mean by that?

Peter Dawson: Infrastructure is an enabler for
economies. There is the benefit of money coming into the economy through
spending, plus the benefits of the infrastructure itself once it is finished.
Building roads in Eastern Europe, for example, generates opportunities for
agricultural exports. We benefit today from people being bold in the past, and
the next generations will benefit from people being bold today.

McKinsey: What are the big roadblocks when
operating in developing countries?

Peter Dawson: Financing is a problem, whether it’s a
port, rail connections, roads, or distributed energy. Almost by definition,
infrastructure is about building a long-term asset, and these projects can take
a long time to finish. How do you manage political decision making when the
benefits are not immediate? Where is the money to be found in the budget? How
do you borrow against the future with confidence?

McKinsey: What do you think of developments in
infrastructure funds and public–private partnerships?

Peter Dawson: I think we’re making progress. It’s
easier for private money to evaluate the existing infrastructure—for example,
taking over an existing airport terminal and then increasing efficiency.
Starting from scratch (what is known as greenfield infrastructure) is a
different risk. The confidence that the political framework will last 20 or 30
years for the life of the assets has to be there. Private investors,
infrastructure funds, and the like have to be confident that they can get
something to closure. You’ve got to be confident that the political risk of the
asset you’re funding—whether it’s an airport or a hydro plant—is covered, even
after development. You also need repeatability.

McKinsey: How can repeatability be encouraged?

Peter Dawson: In developed economies, we’ve seen
private money being successful where there’s been standardization. That gives a
degree of confidence that you will get across the finish line. In some
developing countries, there are so many interested parties and so many people
who need to be consulted that such repeatability is difficult. That makes me
sound like I don’t want to have stakeholder involvement. That’s not true. But
it’s a matter of how.

McKinsey: How do you think about skill and
capability building?

Peter Dawson: From a company perspective, the
short-term way of thinking is to bring in skilled workers from outside and then
move them to another country, another place, when the project is finished. On
the other hand, if I develop a local workforce and a local supply chain, I can
use them on the next project. But there’s another side to this coin. If the
project is in an area where there is likely to be no further work, then what
happens? Do you then get a frustrated community saying, “Well, I have all these
skills. Now what do I do with them?”

In Africa, an oil company we were working with
was interested in developing a local supply chain that could provide fabricated
steel or pipe bending or the like, even if it cost more. There would be a skill
left, and even if the initial cost was higher, the recycling, the economic
advantage, was good. Thousands of workers received skills training, from safety
all the way through to welding and planning skills.

A Middle Eastern country offers another
example. The country knows that it’s important to have skilled jobs for its
growing population, rather than just depending on petrodollars. For example,
the country has to buy thousands of air conditioners every year. So the
government decided to favor in procurement a company that would build a
manufacturing unit in the country and train or develop a skilled workforce and
management. I think it’s a more sophisticated way of looking at pooling the
power of national spending.

McKinsey: Are there models of success that
governments can look at and say, “We can replicate that”? Or is it more that
each country has specific issues and needs to find its own path?

Peter Dawson: A bit of both. Take the oil and gas
companies. The global majors recognize that they’re a common owner with common
customers, even if they’re teaming with national oil companies. There are
global standards if you’re building a refinery in the Persian Gulf, in Europe,
or in Singapore. The standards and efficiencies, the whole operating and
maintenance side, will all be optimized.

Other forms of infrastructure, by their
nature, don’t work that way. For roads, European standards may say you can’t
have a certain degree of curvature if you want to drive above 80 kilometers per
hour, but other countries or regions may have different standards. There’s a
problem with the fact that you don’t have common owners.

McKinsey: What could be done to improve this?

Peter Dawson: The most difficult infrastructure
projects we do are when we don’t have an experienced owner on the other side of
the table. You want people who are knowledgeable and experienced. A European
government did something interesting along these lines. A few years ago, it
realized that most major infra-structure-related projects were late and over
budget. In a sense, the government was the owner of these projects but was not
knowledgeable enough to be able to manage them. So the government set up a
joint education program with a first-rate business school to figure out how to
become smart owners.

If governments or public institutions or
global infrastructure firms could develop common purchasing standards, that
would also make things more efficient.

McKinsey: You’ve said before that government
leaders, democratic or not, sometimes don’t see infrastructure as something
that is to their immediate advantage. Is there a way to frame infrastructure so
it gets people excited?

Peter Dawson: How you connect major infrastructure
development to something that resonates with the public or the taxpayer is
difficult. Particularly in developed economies where things are not yet broken,
there may not be a sense of urgency. People are apt to say, “What about me? I
don’t fly out of London, so why should I care if Heathrow or Gatwick gets
another runway?”

In some economies, the population is so
connected with the success of the country and the economy as a whole that these
things can happen because everyone knows it’s a good thing. The French, for
example, have done extraordinarily well in two areas. One is building
nuclear-power-generation capacity. That took decades, but it is obviously very
significant and good for them. The other is building a very strong
high-speed-rail culture. So the country expects new rail; it takes for granted
that that’s what will happen.

McKinsey: It often seems that big infrastructure
projects are controversial at the beginning but taken for granted once they’re
done.

Peter Dawson: Yes—like the Channel Tunnel, between
England and France. There were big arguments about that in the 1990s; now
people couldn’t imagine not having it.

Even in my relatively short foray into office life, I
notice that few people bring a pen and notebook to meetings. I’ve been told
that over the years, the spiral notebooks and pens once prevalent during weekly
meetings have been replaced with laptops and slim, touch-screen tablets.

I suppose it makes sense. In a demanding new age of
technology, we are expected to send links, access online materials, and conduct
virtual chats while a meeting is taking place. We want instant
gratification, and sending things after the meeting when you’re back at your
desk feels like too long to wait. It seems that digital note-taking is just
more convenient.

But is longhand dead? Should you be embarrassed bringing
a pen and paper to your meetings? To answer these questions, I did a little
digging and found that the answer is no, according to a
study conducted by Princeton’s Pam A. Mueller and UCLA’s Daniel M. Oppenheimer. Their research shows that
when you only use a laptop to take notes, you don’t absorb new materials as
well, largely because typing notes encourages verbatim, mindless transcription.

Mueller and Oppenheimer conducted three different
studies, each addressing the question:Is laptop note taking detrimental to
overall conceptual understanding and retention of new information?

For the first study, the researchers presented a series
of TED talk films to a room of Princeton University students. The participants
“were instructed to use their usual classroom note-taking strategy,” whether
digitally or longhand, during the lecture. Later on, the participants
“responded to both factual-recall questions and conceptual-application
questions” about the film.

The students’ scores differed immensely between longhand
and laptop note takers. While participants using laptops were found to take
lengthier “transcription-like” notes during the film, results showed that
longhand note takers still scored significantly higher on conceptually-based
questions. Mueller and Oppenheimer predicted that the decrease in retention
appeared to be due to “verbatim transcription.”

But, they predicted that the detriments of laptop note
taking went beyond the fact that those with computers were trying to get every
word down. In their second study, Mueller and Oppenheimer instructed a new
group of laptop note takers to write without transcribing the
lecture verbatim. They told the subjects: “Take notes in your own words and
don’t just write down word-for-word what the speaker is saying.”

These participants also watched a lecture film, took
their respective notes, and then took a test.

They found that their request for non-verbatim note
taking was “completely ineffective,” and the laptop users continued to take
notes in a “transcription like” manner rather than in their own words. “The
overall relationship between verbatim content and negative performance [still]
held,” said the researchers.

In a third study, Mueller and Oppenheimer confronted a
final variable — they found that laptop note takers produced a significantly
greater word count than longhand note takers. They wondered, “Is it possible
that this increased external-storage capacity could boost performance on tests
taken after an opportunity to study one’s notes?” So while the immediate recall
on the lecture is worse for laptop note takers, do their copious notes help
later on?

For this study, participants “were given either a laptop
or pen and paper to take notes on a lecture,” and “were told that they would be
returning the following week to be tested on the material.” A week later, they
were given 10 minutes to study their notes before being tested.

And again, though the laptop note takers recorded a
larger amount of notes, the longhand note takers performed better on
conceptual, and this time factual, questions.

This final test clarified that the simple act of verbatim
note taking encouraged by laptops could ultimately result in impaired learning.
“Although more notes are beneficial, at least to a point, if the notes are
taken indiscriminately or by mindlessly transcribing content, as is more likely
the case on a laptop than when notes are taken longhand, the benefit
disappears,” said Mueller and Oppenheimer.

Though your days of cramming for tests may be over, you
still need to recall pitches, dates, and statistics from meetings. That’s why
we take notes in meetings. And while there are plenty of ways to work smarter with digital tools, you may remember
more if you leave the laptop or tablet at your desk and try bringing a notebook
and pen instead.

In addition to your mode of note taking, be extra aware
of what you’re writing. Are you focusing more on recording
what a speaker is projecting on a slide show, rather than actuallylistening to what is being said? Write your notes
in your own words. It’ll encourage you to process and summarize what is being
said rather than just regurgitating it.

Of course, not every meeting is the same, so you need to
be able to distinguish what type of meeting you’re attending. Bring your laptop
or tablet if you know you’ll need to just record a few key dates or a to-do
list — and if you need access to materials or the internet. But keep in mind
that meetings such as presentations, progress reports, and performance reviews
contain information you need to stick. If you ditch your digital ways, and
bring the pen and spiral notebook; your memory may thank you

Modern
grocery and the emerging-market consumer: A complicated courtship

In some emerging
markets, the response to modern grocery formats has been tepid. What’s a modern
grocer to do?

Just 20 years ago, modern grocery retail appeared poised to
conquer every consumer market in the world. Ambitious European grocers, having
blanketed their home countries with supermarkets and hypermarkets, began
setting their sights on growth both within and beyond the continent. They held
particularly high hopes for China, India, and other emerging markets, where
fast-rising consumer spending seemed to presage an unprecedented demand for
gleaming new stores with large assortments, wide aisles, and bright lighting.

In the 1990s, the term “modern grocery retail”
was essentially a proxy for a small group of multinational grocers including
Ahold, Aldi, Auchan, Carrefour, Costco, Lidl, Metro, Tesco, and Walmart. It was
widely presumed that these retailers’ entry into any market would lead to the
demise of the traditional trade—the family-owned grocery chains, small
independent stores, and informal merchants that at the time accounted for the
vast majority of grocery sales in emerging markets. The prevailing expectation
was that although there would be local differences due to cultural
specificities, in every country the retail landscape would eventually consist
of a combination of modern formats: full-line supermarkets and hypermarkets,
convenience stores, and discounters.

These assumptions have been proved wrong. Global
grocery giants are struggling to grow profitably in many emerging markets.
Traditional trade has proved remarkably resilient. And the market and channel
structures taking shape in individual emerging economies are distinct from one
another, following no obvious pattern.

Why did this happen? What, if anything, did
multinational grocers do wrong? And what does it mean for the future of modern
retail in emerging markets?

The hypermarket’s shortcomings

To understand the disparity between early
expectations and the current reality, it’s useful to examine the roots of the
two quintessential modern-trade formats: the supermarket and the hypermarket.
The hypermarket in particular—whether in its European form (in which food
anchors a massive selection of nonfood items) or its North American one (the
“supercenter,” which represents the successful injection of food and grocery
into a general-merchandise discount store)—was widely regarded as unbeatable.
By offering tens of thousands of products in an immense building just outside
or on the edge of a town or city, a hypermarket could operate at a level of
productivity that other grocery formats struggled to match. Hypermarket
operators passed on these efficiency gains to consumers in the form of lower
prices, which served to reinforce hypermarkets’ advantage.

In their first forays into other developed
markets abroad, major retailers relied heavily on the hypermarket format. When
French retailers Auchan, Carrefour, and Promodès opened hypermarkets in Spain
during the first years of Spanish economic reform, they quickly captured a
large fraction of that country’s overall grocery sales and dictated the market
structure that remains in place to this day.

Expansion across
Europe was an exciting growth prospect, but even more enticing to retail
leaders and investors was the growth potential of emerging markets. Over the
years, that potential has become even clearer: by 2025, we expect emerging
markets to account for $30 trillion in consumer spending, or nearly half of
global consumption.1

When multinational grocers entered emerging
markets, they again relied on the grocery formats that were working so well in
the developed world. But, in retrospect, it’s clear that the countries in which
the hypermarket prospered had several characteristics in common: good road
networks and high or fast-rising car-ownership rates, a large middle class that
enjoyed decent wages and stable employment, and a high proportion of rural and
suburban households with enough room at home to store groceries bought in bulk.
Also, those markets had grown to maturity at a time when many women didn’t
return to work after having children and therefore had time during the day to
drive to and from the store. The hypermarket format draws heavily on consumers’
time, ability to travel, and storage capacity.

In emerging markets, retailers encountered an
entirely different context. Consumers were less affluent and lived in urban
areas; many didn’t own a car, couldn’t afford to travel to and from a
relatively far shopping destination, had no room at home to store purchases, or
all of the above.

A new respect for localism

Further complicating matters, emerging markets
weren’t just different from developed markets; emerging markets also differed
from one another in nontrivial ways. That was true in the 1990s and it remains
true today. Based on our research—which involved in-depth study of the retail
sector in ten developing countries in Asia, Eastern Europe, and Latin America,
as well as interviews with more than 20 local retail and consumer experts and
analysis of channel-growth data in these markets—we’ve developed a perspective
on the factors that have hampered the growth of modern trade in emerging
markets.

On both the demand side (what customers want
from retailers) and the supply side (the means by which retailers can deliver
what customers want), different factors shape the retail ecosystem in each
country. Together, these factors produce wide variability in the level of
modern-trade development in countries around the world.

On
the demand side, for instance, food-shopping habits have turned out to be
largely localized and deeply entrenched. Emerging-market consumers tend to
prepare their own meals and cook more than their peers in developed markets do,
and they are accustomed to shopping at open-air market stands or small
neighborhood grocery stores that offer a familiar selection of fresh food and
household staples. They don’t necessarily perceive customer service at modern
retailers as superior to that of the traditional trade. Customers of
India’s kirana stores—small, family-owned retail shops in or
near residential areas—already benefit from personal service from the store
owner, free home delivery, and credit and cash rebates if they remain loyal.

On the supply side, a big factor is the
informality of traditional trade: many small retail businesses rely on unpaid
labor from family and friends, pay no rent because they own their storefronts,
and don’t pay corporate taxes. Modern retailers cite this informality as a
major challenge when competing with local retailers. A European hypermarket
chain found that its considerable operating-cost advantage from better sourcing
and supply-chain processes was canceled out by the fact that it was paying
taxes while local competitors were not.

Another major factor affecting modern trade is
public policy. India’s restrictions on foreign direct investment have limited
the growth of modern retail there; in China, by contrast, city governments are
assessed on the level of economic activity and foreign investment they attract,
which makes them biased toward supporting modern trade. As a result,
modern-trade penetration in China’s largest cities has grown significantly over
the past 15 years.

A further supply-side factor in emerging
markets is the fragmented supplier base, which places a natural limit on the
benefits of scale. A retailer can’t source products as efficiently as it would
in a mature market because it must buy from a complex network of regional and
local entities. And even retailers with a national buying team won’t easily
find national manufacturers who are eager to partner with them—a point we pick
up on later.

Incumbent advantage is yet another powerful
factor shaping retail ecosystems. Today’s market dynamics tend to become
tomorrow’s market structure—so, for example, in markets in which a highly
efficient wholesale system serves the traditional trade, it becomes much harder
for modern grocers to gain a foothold. That said, wholesalers can also be
vanguards of modernization. In Turkey, for instance, some Bizim Toptan stores
have developed a substantial retail business. These wholesalers-cum-retailers
illustrate the fact that ecosystems in emerging markets are partly shaped by
players that can concentrate and coordinate a critical mass of what otherwise
is a complex set of routes to market.

Seven strategic levers for success

In parts of the world where the market
structure is itself still in a formative stage, retailers need a bespoke
strategy. Our research and experience suggest seven strategic levers that lead
to success in emerging markets. These levers—having to do with delivering what
consumers want, working effectively with other players in the ecosystem, and
generating lasting productivity advantages—reflect perennial concerns for
retailers everywhere, but they are especially critical in helping retailers
secure a profitable future in the world’s fastest-growing economies .

The levers are by no means comprehensive. For
one, they don’t touch on digital technology, which may well be just as
important in emerging markets as in developed ones; indeed, rapid adoption of
smartphone technology may allow emerging markets to leapfrog more mature
markets and reconfigure the value chain farther upstream (for example, by
giving smaller suppliers direct access to national and even global markets).
Rather, we draw attention to areas that we believe require deliberate action in
emerging markets.

1. Prioritize
proximity.

Urban consumers with limited budgets and
smaller homes often prefer to buy small amounts frequently, both for immediate
consumption and for stocking up. And where trading space is constrained,
proximity formats offer a more realistic prospect of economic returns for the
retailer. Modern retailers can benefit from their experience operating smaller
urban formats in developed markets—banners such as Albert Heijn’s AH to Go in
the Netherlands or Tesco Express and Sainsbury’s Local in the United Kingdom.

One market in which
small-format stores have been the major driver of modern-trade development is
Indonesia. Sales through the convenience-store channel are growing at a rate of
more than 25 percent per year across the country. In fact, the increasing
dominance of convenience stores, known locally as mini-marts, has led to a
contraction in the number of supermarkets and hypermarkets. The mini-mart
chains mimicwarungs, which are small family-owned retail or restaurant
businesses that play a central role in Indonesian social life. Although the
mini-marts are run by modern retailers—in addition to leading national chains
Alfamart and Indomaret, international players such as Circle K and 7-Eleven
have moved into the market—the customer’s experience in mini-marts is not so
different from that in warungs.

2. Keep prices low—and
make sure consumers know.

The prediction that emerging-market consumers
would initially shop at discounters and then “graduate” to supermarkets hasn’t
come true. Discounters, or retailers that exhibit at least three of four core
discounter characteristics—low prices, limited range, low-cost store retrofits,
and ultra-simple operations—have more than held their own against supermarkets.
In Turkey, for example, discount stores are the fastest-growing channel,
largely due to the success of local companies such as A101, BIM, and Şok

Perhaps the success of discounters shouldn’t
be so surprising, given the stature they enjoy even in one of the largest and
richest retail markets in the world: Germany. Low-price stores can establish a
dominant position in markets that are going through rapid increases in
disposable income (as was the case, of course, in postwar West Germany). When
the first modern-trade stores to open in a market are discounters, they can set
price expectations permanently.

Other modern formats
can also compete on price, but they have to work harder to get consumers to
notice. Our research suggests most modern retailers don’t get full credit for
the value they offer. This is the case with Indonesia’s hypermarkets, which
typically are cheaper places to shop than warungs but haven’t
been able to convey that message to enough consumers. Some common modern-trade
practices such as high/low pricing can actually undermine a retailer’s value
message. In Peru, where bodegas and market stands account for some 80 percent
of grocery sales, we found that modern retailers—despite often having lower
full-basket prices than traditional retailers—nevertheless lag behind
traditional retailers by more than 15 percentage points in consumer perception
of low prices.

3. Obsess over
productivity.

In markets where labor costs are low, it can
be difficult to retain a relentless focus on productivity. But wages are rising
fast in emerging markets and bad habits are notoriously hard to unlearn.
Retailers that have been obsessed with productivity have achieved striking
results. BIM’s decisions on new-store openings in Turkey are driven as much by
logistics-network optimization as by local demand attractiveness. BIM follows a
“mushroom” expansion model: it grows to high density in specific neighborhoods
within a city, using retail formats that require low capital expenditures. The
high density of deliveries has allowed it to solve the small-format logistics
puzzle that has tripped up many big-box players.

Corporación Favorita in Ecuador offers another
example of operational excellence: its just-in-time inventory model of daily
deliveries essentially eliminates backroom stock. To ensure full control of
store operations, it eschews direct store delivery, managing all flows through
its central warehouses. This focus on operations has enabled the company to
successfully manage a complex format portfolio.

4. Make the business
case to manufacturers.

A rarely discussed obstacle to the expansion
of modern trade in emerging markets is the fact that established manufacturers
don’t have much incentive to do business with modern retailers. Branded
manufacturers enjoy high margins supplying small shopkeepers, who have little
negotiating leverage. Why would they want to jeopardize that business in favor
of modern-trade retailers with initially limited volumes and terms that are
often less vendor friendly (especially if the retailer is a subsidiary of a
global company)?

To woo major manufacturers, modern retailers
may need approaches that are as creative, collaborative, and mutually
beneficial as those they employ in developed markets. One argument full-line
modern retailers can make is that branded manufacturers ought to support them
rather than discounters. After all, in markets where discounters dominate,
consumers can shift en masse away from branded products toward private-label
goods.

5. Educate policy
makers on the benefits of modern trade.

As mentioned earlier, government intervention can
play a critical role in how, and how quickly, modern trade develops. In China,
the strong central mandate to provincial and municipal authorities to create
the necessary infrastructure for modern retailers—not just thousands of miles
of new roads, but also urban planning that integrates modern-trade requirements
into traffic patterns and real-estate zoning—has yielded extraordinarily rapid
development.

Modern-trade players would do well to
communicate the benefits of modern retail to government officials. They could,
for instance, make a strong case that modern retailers can do a better job than
traditional trade in providing safe and cheap access to high-quality food and
household goods.

6. Consider partnering
with the traditional trade.

One growth strategy for modern-trade players
involves partnership with—rather than competition against—the traditional
trade. The strategy has clear advantages: it allows a modern retailer to
leverage the network and personalized service of the traditional trade while minimizing
capital investment.

Eurocash in Poland is an example. Although its
cash-and-carry stores and distribution centers play a wholesaler role, Eurocash
also welcomes traditional-trade retailers as franchisees under its abc
convenience-store banner (approximately 6,000 stores) and its Delikatesy
Centrum banner (approximately 1,000 stores). This franchising approach has
allowed Eurocash to grow quickly and profitably. Another example of partnership
with the traditional trade comes from Grupo Éxito in Colombia: small retailers
that join its Aliados Surtimax network receive Surtimax signage and fixtures,
access to Grupo Éxito’s portfolio of private brands, and business and
management training. Grupo Éxito has rapidly built a network of more than 500
stores at an extremely low capital-expenditure rate of less than $500 per
store.

7. Adopt a city-based
strategy.

When a market is in a
relatively early state of modern-trade development, national borders can be
unhelpful in scoping and designing a retail network. Rather, retailers should
concentrate on getting to scale in cities or city clusters.2 Thus, Supermercados Guanabara, the market leader in Rio de
Janeiro, has confined itself to the metropolitan area and operates just 23
stores—yet it outperforms formidable competitors, including Carrefour and
Walmart.

In China, some
retailers have chosen to concentrate first on one city or city cluster, be it
Shanghai or Shenyang, before expanding nationally. Similarly, modernization in
India’s retail sector will most likely happen through a series of players
expanding in individual cities and states, rather than through a “big bang”
national expansion plan.3

For any modern retailer, success in emerging markets isn’t
guaranteed. Our research confirms the complexity and local specificity of
market development and the degree to which it depends on initiatives taken not
just by retailers but also by governments, manufacturers, wholesalers, and
others in the local retail ecosystem. International retailers thus need to
become experts at local tailoring. That said, operating in emerging markets
still unquestionably requires excellence in core retailing competencies:
marketing, merchandising, supply-chain management, and talent development, to
name just a few. Retailers that excel in all these areas in the context of
markedly different emerging-market structures will, in a sense, have conquered
the world.

Sunday, August 30, 2015

When you think about how hard it is
to make changes in your life, you're tempted to give up before you even start.
It's easier to coast through a good enough life. Everywhere you look, another
person or situation trying to convince you a mediocre life is perfectly fine.

In one of her songs, Taylor Swift
says, "People throw rocks at things that shine." Marianne Williamson
is famous for saying, "Our deepest fear is not that we are inadequate. Our
deepest fear is that we are powerful beyond measure. It is our light, not our
darkness that most frightens us. We ask ourselves, Who am I to be brilliant,
gorgeous, talented, fabulous?"

Society has conditioned us against
stepping out and claiming the kind of life we want to live. Life is short and
time can never be recovered. Each moment is precious and should be lived to the
fullest.

Here are five ways to create lasting change that leads to an amazing
life.

1. Start with the inner work. Real change starts within each of us. There are struggles
and self-limiting beliefs that we have to battle before we can move forward.
Take some time for a self-examination of where you are and where you want to
be. Address that little voice in your head that gets uncomfortable at the
thought of stepping outside of your comfort zone.

2. Be honest with yourself. For the inner work to manifest, it starts with honesty.
It's too easy to lie -- especially to ourselves. Real change starts with
getting honest about the things that have held you back in the past, and what
scares you about the future. Change lasts when you get honest and stay honest.
You will have setbacks, and the honesty helps you keep from covering up what
will help you.

3. Focus on one step at a time. When you look at the big picture, it's easy to get
discouraged at everything that needs to happen to create change. If you want to
lose 50 pounds, it seems daunting. If you want to leave a job you hate, you get
100 thoughts of all that needs to happen. The best way to approach lasting
change is to focus on your next steps. Don't look at the big pictures. Instead,
break this down into bite size goals that you work on every day.

4. Forms habits. Lasting change is most successful when you focus on
creating habits. Habits are making lifestyle shifts versus quick wins. You
incorporate the changes you want to make into your daily routine. You focus on
changing how you think about the things you want to change, which affects the
actions you take.

5. Stay accountable. Having support in your life can be the difference between
success and failure. As much as we want to try this alone, having someone to
get honest with you or hold your hand when you stumble, is crucial. It can be
family, friends, or a support group, but stay accountable to avoid giving into
excuses.

I realize this is all easier said
than done, but I hope you realize how important this is. The death of my father
and grandfather were my wake up call. They were the catalyst to shake me out of
a 12-year period in my life that could best be described as existing. Today,
I'm truly living and loving life.

I don't know what your dream life
looks like. I only know you can and should do something about it. You can make
your dream a reality, and it starts with creating lasting change in your life.
Use these five ways to claim the life you truly deserve!